Ever since I left my day job in 2012, I’ve used a type of the dumbbell investing technique to develop my wealth whereas defending in opposition to massive losses. It’s a framework that’s helped me keep invested throughout unsure instances—particularly once I felt the urge to hoard money or sit on the sidelines.
When you’re in a scenario the place you know it is best to take some threat, however you are additionally nervous about shedding cash, the dumbbell investing technique is price contemplating.
What Is the Dumbbell Investing Technique?
The dumbbell investing technique includes allocating a roughly equal portion of your investable belongings into high-risk, high-reward investments on one finish, and low-risk, capital-preserving investments on the opposite.
When you’re working with a 50/50 threat cut up—like I counsel in my put up about when to stop taking excess risk—you’re already making use of a model of the technique. It’s particularly helpful while you’re unsure concerning the macroeconomic atmosphere or your private monetary scenario.
Why I First Embraced the Dumbbell Technique
Essentially the most unsure instances in my life have been:
- Graduating from school with out a written provide from a Wall Avenue agency
- Leaving my profession at 34 and questioning whether or not I had made an enormous mistake
- Changing into a father in 2017 and questioning whether or not our passive revenue was really sufficient
Every time, I needed to put money into my future and my household’s, however concern held me again. So I deployed the dumbbell investing technique after I retired and once I grew to become a father to offer myself the psychological permission to take motion. As a result of the longer you keep away from taking any funding threat, the extra probably you’re to fall behind.
Why I’m Deploying the Dumbbell Technique Once more in 2025
In the present day, I’m extra financially safe than previously. However I’m additionally a lifelong investor, and proper now the market provides me pause. Between tariffs, new laws, stretched valuations, elevated rates of interest, and AI hype cycles, I’m not dashing to load up on the S&P 500 at 22X ahead earnings.
Nonetheless, I imagine in dollar-cost averaging and that the market can be increased over time. However when uncertainty is excessive, the temptation to hoard money will increase. The issue? By the point certainty returns, the simple features have typically already been made.
Take the March–April 2025 tariff-induced selloff. When you waited for decision, as a substitute of buying the dip, you’d’ve missed out on a 20%+ rebound. The perfect returns are inclined to go to those that act when others are frozen.
For this reason, fairly than cease investing, I’m leaning on the dumbbell technique once more.
The Conservative Finish of My Dumbbell
Because the individual answerable for our household’s monetary well-being, I really feel fixed strain to ship a good-enough life-style, if not an ideal life-style. Each greenback saved or invested in risk-free income is a step nearer to peace of thoughts.
My final objective is to generate $380,000 in gross passive revenue a 12 months, up from about $320,000 at the moment. That $60,000 hole is what I’m methodically making an attempt to shut by the tip of 2027.
With Treasury yields nonetheless above 4%, I noticed an ideal alternative to lock in strong returns with no threat. So I deployed capital into a mixture of short-term and longer-duration authorities bonds.
On one finish of my dumbbell, I bought:
- $100,993.74 in 3-month Treasury payments yielding ~4.45%
- These will mature quickly, and I’ll proceed to roll them into comparable period or longer-term bonds, relying on rate of interest traits
Over the subsequent 12 months, this place alone will generate roughly $4,450 in risk-free passive revenue, lowering my annual deficit to about $53,550. Passive revenue progress feels great!
The Aggressive Finish Of My Dumbbell
Now that I’ve shored up the conservative finish of my dumbbell investing technique, it’s time to swing to the aggressive facet.
I might merely make investments one other $100,000 into the S&P 500, which I usually allocate round 70% of my public fairness publicity to. However the S&P 500 feels costly right this moment, and I’m already closely invested. As an alternative, I wish to put capital towards what I’m each most excited by—and most involved about: artificial intelligence.
AI is already disrupting the job market, and my greatest fear is that it’ll make spending a fortune on school an more and more poor monetary resolution. Entry-level jobs are on the highest threat of being automated or eradicated. As a father or mother of two younger youngsters (8 and 5), this concern weighs closely on my thoughts.
To hedge in opposition to a doubtlessly tough employment future for them, I really feel it’s crucial to put money into the very expertise that may hurt their prospects. Ideally, they’ll discover ways to harness AI to spice up their productiveness, and even be a part of an AI firm and construct wealth of their very own. However these outcomes are unsure.
What I can do now could be make investments instantly within the AI revolution on their behalf.
Investing In Synthetic Intelligence
Consequently, I’ve invested one other $100,000 in Fundrise Venture, which holds positions in main AI firms similar to OpenAI, Anthropic, Databricks, and Anduril. If AI finally ends up consuming the world, I wish to ensure that they’ve a seat on the desk—no less than financially. I am additionally investing extra capital by means of closed-end enterprise capital funds as they name capital. I am additionally investing extra capital by means of closed-end enterprise capital funds as they name capital.
My hope is that proudly owning a basket of personal AI firms will compound at a a lot sooner fee than the S&P 500, given these firms are rising a lot sooner. However after all, there are not any ensures.

The Dumbbell Funding Technique Is Finest for Deploying New Money
The dumbbell investing technique made it simple for me to take a position a little bit over $200,000 in money from my dwelling sale. Allocating $100,000 into T-bills provides me peace of thoughts that, irrespective of how unhealthy the economic system or markets get, no less than half of my funding is totally protected and incomes risk-free curiosity.
In the meantime, if AI mania continues, I’ve $100,000 positioned to trip the wave increased. Each allocations make me really feel good—and the way you are feeling about your investments issues. The extra assured you’re, the extra probably you may keep invested and maintain constructing wealth by investing extra. That’s why, if I obtain one other inflow of money or wish to redeploy present funds, I’ll probably proceed rising this dumbbell technique.
The dumbbell method works finest when you may have new cash to take a position or idle money sitting round throughout unsure instances. Nevertheless, rebalancing an present portfolio right into a 50/50 cut up between risk-free and threat belongings is a special matter. Your broader asset allocation ought to mirror your age and stage in life. A 50/50 allocation is perhaps applicable, however massive rebalancing strikes can set off tax penalties you should think about fastidiously.
Instance Of Utilizing The Dumbbell Technique To Get To An Preferrred General Internet Value Allocation
For instance, suppose I have already got a $1 million funding portfolio and inherit $200,000 in money, bringing my web price to $1.2 million. At 45 years outdated with 10 extra years of deliberate work forward, I’m comfy taking extra threat. I’d be effective investing 90% of my web price ($1,080,000) in threat belongings and beginning a facet enterprise to pursue development alternatives.
If my authentic portfolio consisted of $980,000 in threat belongings and $20,000 in money and bonds, I might simply apply the dumbbell technique by allocating $100,000 of the brand new money to municipal bonds and $100,000 to shares. This may carry my whole to $1,080,000 (90%) in threat belongings and $120,000 (10%) in risk-free investments—completely aligning with my preferrred 90/10 allocation.
Conclusion: A Easy Framework for Peace of Thoughts and Progress
The dumbbell investing technique presents a transparent and sensible strategy to deploy new money, particularly throughout instances of uncertainty. By allocating capital to each low-risk and high-risk belongings, you achieve the emotional reassurance of security whereas sustaining publicity to upside potential. It’s a versatile method that may be tailor-made to your monetary objectives, threat tolerance, and stage in life.
Whether or not you are investing an inheritance, reallocating proceeds from a house sale, or just sitting on extra money, the dumbbell technique offers construction with out sacrificing alternative. Better of all, it helps you keep motivated and assured—two important elements for long-term investing success.
So the subsequent time you end up with idle money and resolution paralysis, think about the dumbbell method. You simply may sleep higher at night time whereas nonetheless constructing wealth throughout the day.
Readers, have you ever ever thought of utilizing the dumbbell investing technique throughout instances of uncertainty? What potential flaws or extra advantages do you see with this method? I’d love to listen to your ideas.
Steadiness Threat and Reward With a Free Monetary Test-Up
When you’re sitting on new money or reevaluating your portfolio throughout unsure instances, a second opinion could make all of the distinction. One sensible transfer is to get a free financial check-up from a seasoned Empower monetary advisor.
Whether or not you may have $100,000 or extra in taxable accounts, financial savings, IRAs, or a 401(ok), an Empower advisor may help you see hidden charges, unbalanced allocations, or missed alternatives to enhance your risk-adjusted returns. It’s a no-obligation strategy to stress-test your present technique—whether or not you are constructing a dumbbell portfolio or contemplating a full rebalance.
Readability brings confidence. And on the subject of investing, confidence helps you keep the course.
The assertion is offered to you by Monetary Samurai (“Promoter”) who has entered right into a written referral settlement with Empower Advisory Group, LLC (“EAG”). Click on here to study extra.
Go Past Shares and Bonds: Passive Actual Property Investing with Fundrise
A basic dumbbell technique contains bonds and equities—however remember about actual property. I prefer to deal with actual property as a hybrid: it presents the revenue stability of bonds with the potential appreciation of shares.
I’ve invested over $400,000 with Fundrise, a platform that lets you passively put money into diversified portfolios of residential and industrial properties—many within the high-growth Sunbelt area. With over $3 billion in belongings underneath administration and a low $10 minimal, Fundrise has been a core a part of my funding technique, particularly once I’ve had money to redeploy.
Need publicity to the subsequent wave of innovation? Fundrise additionally presents Venture, supplying you with entry to personal AI firms like OpenAI, Anthropic, and Databricks. As talked about earlier, I’m closely targeted on AI’s transformative potential and need publicity not only for returns—however for my youngsters’ future too.
With a dumbbell technique, it’s not nearly stability—it’s about positioning your self for each safety and development.
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